PRECIOUS METAL AND ENERGY STOCKS LEAD MONDAY RALLY -- SO DO NATURAL GAS STOCKS -- STOCK INDEXES BOUNCE OFF 50-DAY LINES BUT ON LIGHTER VOLUME
FALLING DOLLAR HELPS... A falling dollar is giving boost to stocks and commodities on Monday. Gold stocks are the one of the day's top groups. The reason is a jump in gold and silver prices. Chart 1 shows the streetTrack Gold Trust ETF (GLD) climbing the equivalent of $13 and in position to challenge its recent high. The recent pullback found support at its June high near 97. Chart 2 shows the Market Vectors Gold Miners ETF (GDX) climbing 4.3%. The GDX is bouncing off chart support along its August peak and 50-day average near 42. Its relative strength ratio (below Chart 2) shows new leadership in precious metal stocks.
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GOLD AND SILVER LEADERS ... Two leading gold stocks are shown bouncing off support along their summer highs. Agnico Eagle Mines (AEM) is finding support along its June high near 62.5 (Chart 3). Chart 4 shows Kinross Gold (KGC) bouncing off support along its July/August highs and its 50-day moving average. Silver stocks are doing even better. Charts 5 through 7 show strong chart action in Coeur D Alene Mines, Hecla Mining, and Silver Wheaton. That's not too surprising considering that silver has gained 45% during 2009 versus only 15% for gold.
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ENERGY PRICES ARE RISING... Energy prices are on the rise today as well. Chart 8 shows the United States Oil Fund (USO) turning in a strong performance. The two converging trendlines show a bullish "symmetrical triangle" in the making. The bullish pattern is usually resolved on the upside. Natural gas prices are also rising. Chart 9 shows the United States Natural Gas Fund (UNG) breaking a three-month down trendline as well as its 50-day moving average. That's giving an added boost to energy stocks and ETFs which are one of the the day's strongest sectors.
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NATURAL GAS LEADERS ... On September 15, I wrote a positive article on oversold natural gas prices and suggested that gas stocks were starting to show upside leadership in the energy sector. I showed several of those natural gas stocks including the two below. Charts 10 and 11 show Chesapeake Energy and EOG Resources having already cleared their 2009 highs. Their rising relative strength lines (vs. the XLE) shows them leading the energy sector higher. Chart 12 shows a natural gas leader that I didn't include in my earlier article. It shows Apache Corp. having recently reached a new 2009 high. Its rising RS line shows it outperforming the XLE. The black lines on top of all three charts show that the XLE has yet to achieve an upside breakout. [A bullish article in Barron's over the weekend on Peabody Energy has also given a boost to coal stocks on Monday].
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STOCKS BOUNCE OFF 50-DAY LINES ... Strong news in the service sector and a brokerage bank upgrade helped set a positive tone for stocks today. All three major stock ETFs bounced off their 50-day moving averages, which kept their short-term uptrends intact. The only potential negative is relatively light trading. The weaker dollar also helped stocks, but was especially helpful to commodities. Bank stocks gained 3% in a strong financial group.
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